Trump wants the tax reform plan passed by the end of the year, but that's a 'farcical fantasy'

  • President Donald Trump and Republicans want to get tax reform passed by the end of 2017.
  • The window is closing quickly, with under 30 days left in the legislative calendar.
  • Many analysts believe such a feat will be nearly impossible.

Gary Cohn, the director of the National Economic Council and President Donald Trump’s top economic adviser, wants tax reform done this year.

“It’s really ambitious and I think it’s really possible and I think it’s really essential,” Cohn said at an American Bankers Association meeting Monday. “I think we have a unique window in time right now, but unfortunately we keep losing days to this window. … The opportunity is now.”

While pressure is mounting on Congress to pass a tax package, the calendar shows dwindling opportunity before the calendar flips to 2018.

With the House out for the week, there are 28 days remaining on the legislative calendar in 2017 in which both chambers are scheduled to be in Washington at the same time.

Analysts say that simply isn’t going to happen.

“The idea of getting tax reform done this year is a farcical fantasy,” Issac Boltansky, an analyst at the research firm Compass Point, told Business Insider. “Lawmakers have neither the time nor the capacity to formulate and clear a tax reform package in 2017.”

The “Big Six” tax negotiators and President Donald Trump have unveiled a nine-page unified framework that was released late last month. They still must come to an agreement on finalised tax legislation, take that legislation through committees on both sides of Capitol Hill, pass the bill through the House and Senate, and settle any differences between the two bills if they are passed.

There are already some substantial policy cracks opening up within the party on the push — from the possible elimination of the state and local tax deduction to the amount the proposal would add to the federal deficit.

And since the party plans to use the budget reconciliation process to preempt a filibuster from Democrats in the Senate, the chamber needs to pass a budget resolution and either get that resolution through the House as is or work with the House to reconcile the differences between their separate budgets.

Greg Valliere, chief global strategist at Horizon Investments, said Republicans can spin potential passage of the budget as progress toward tax reform. But he said getting the whole process finished in 2017 is likely impossible.

“They first have to agree on a budget — House-Senate conference committee may not iron that out till early November,” Valliere said in an email. “Obviously not enough time to enact a tax bill, but the spin will be that there’s progress — true — and a bill can pass by the end of the winter — probably true.”

Brian Gardner, director of Washington research at Keefe, Bruyette, & Woods, said the timeline for the House may be shorter — similar to healthcare. Since House Speaker Paul Ryan’s chamber already passed its budget resolution and the margin for error on votes is larger, Gardner said the House could make the deadline.

“Assuming the budget resolution is finished by late October/early November, we expect the House will pass a tax bill by year-end 2017,” Gardner said in a note to clients. “We expect the Senate will move slower and may not vote on a tax bill until early 2018. Under what we consider a best-case scenario, tax legislation could be finished in the first half (probably the second quarter) of 2018.”

But Congress is also running up against a slew of other deadlines that could complicate progress. For one, it must also address the expiration of federal funding in December to avoid a government shutdown.

“At this point, the real conversation should focus on whether there can be sufficient progress this year to set the stage for action next year,” Boltansky said. “A tax package in this Congress is still possible, but with each passing day — and each new distraction — it becomes less probable.”

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